Asian shares fell at open Wednesday after US equities closed lower, rounding out a turbulent month that saw global stocks drop about 3%.
(Bloomberg) — Asian shares fell at open Wednesday after US equities closed lower, rounding out a turbulent month that saw global stocks drop about 3%.
Shares dropped in Japan and Australia, while contracts for Hong Kong’s Hang Seng suggested modest gains. A gauge of US-listed Chinese companies was marginally lower Tuesday. South Korean markets are closed for a holiday.
Futures for S&P 500 and Nasdaq 100 also slid after both indexes dropped in February. A gauge of dollar strength looked set to advance for a second day after notching its first monthly gain since September as investors recalibrated for a higher likely peak in US interest rates.
Treasury yields extended their climbs for the second session and government bond yields also advanced in Australia and New Zealand. Over the month, the two-year Treasury yield climbed more than 10 basis and the 10-year rate rose more than 40 basis points.
Looking ahead in Asia, traders will be watching for purchasing managers’ data from China along with economic growth and inflation figures from Australia.
“While the Fed is still raising rates, there’s going to be nervous and jittery markets. And so we do expect choppy markets over the next three months or so,” Loreen Gilbert, chief executive officer of WealthWise Financial Services, said on Bloomberg Television.
Bond yields rose in Europe as well on Tuesday after hot inflation data caused a reassessment of rate expectations, picking up a theme that has dominated trading in a month that saw the Federal Reserve signal its intention to ratchet rates higher than the market had been anticipating.
Investors in February grappled with the realization that inflation isn’t cooling to the extent the Fed would like to see, especially as key indicators the central bank is watching came in hotter than expected. That subdued some of the optimism that had sent stocks soaring in January.
Bond traders no longer view the odds of a Fed rate cut this year as better-than-even, a shift from what they were expecting just a month ago. Traders are now pricing US rates to peak at 5.4% this year, compared with about 5% just a month ago. Market expectations also see the European Central Bank raising rates through February 2024, with a 4% ECB terminal rate fully priced.
Traders are also, once again, sifting through a bevy of economic data on Tuesday. US consumer confidence declined in February because of concerns about the outlook for jobs, incomes and business conditions. US home prices, meanwhile, fell for a sixth consecutive month.
In commodities, oil fell as a US industry estimate pointed to another sizable increase in nationwide crude inventories and investors remained concerned about the prospect of further monetary policy tightening.
Key events this week:
- China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday
- Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- Eurozone CPI, unemployment, Thursday
- US initial jobless claims, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.4% as of 9:08 a.m. Tokyo time. The S&P 500 fell 0.3%
- Nasdaq 100 futures fell 0.5%. The Nasdaq 100 fell 0.1%
- Japan’s Topix index fell 0.2%
- Australia’s S&P/ASX 200 Index fell 0.5%
- Hong Kong’s Hang Seng futures rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at $1.0572
- The Japanese yen fell 0.1% to 136.31 per dollar
- The offshore yuan was little changed at 6.9553 per dollar
Cryptocurrencies
- Bitcoin was little changed at $23,153.44
- Ether fell 0.1% to $1,603.55
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.94%
- Australia’s 10-year yield advanced five basis points to 3.90%
Commodities
- West Texas Intermediate crude fell 0.5% to $76.64 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rheaa Rao.
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